RNS Number : 6690X
Defined Capital Return Fund Ltd
26 June 2008
The Defined Capital Return Fund Limited
Preliminary announcement of the unaudited results for the period ended 30 April 2008
Incorporation
The Company is a closed-ended investment company incorporated in Jersey on 17 August 2004. Admission to the official list of the UK
Listing Authority and dealing in shares commenced on 1 November 2004. The Company has a fixed life expiring on or about 30 October 2009.
Investment objective and policy
The investment objective of the Company is to provide ordinary Shareholders with a defined capital payment per share of 136.49 pence
('Defined Capital Return') at the winding-up date. This return will be contingent on the level of the FTSE 100 at the end of the life of the
Company. Provided that the FTSE 100 on the winding-up date is not below 85 per cent. of its level on the start date of 4,615.40 (the "Start
Value"), Shareholders will receive the Defined Capital Return on or soon after 2 November 2009.
The Company has and will continue throughout its life to be invested in a portfolio of at least 6 medium term floating rate notes
("Bonds") which pay interest gross. The interest received from these Bonds is used to meet ongoing costs and to fund payments due under the
FTSE Transaction which it has entered into with UBS AG ("FTSE Transaction Counterparty"). Under the FTSE Transaction, the Company swaps
periodic amounts based on the interest return received by it in respect of the Bonds with the FTSE Transaction Counterparty. In addition,
under the FTSE Transaction, the FTSE Transaction Counterparty is (provided that the final FTSE level is not below the break-even level)
obliged to pay an amount which, together with the principal amounts payable on redemption of the Bonds, is intended to provide the final
capital entitlement. If however, the final FTSE level is below the break-even level, no payment is due from the FTSE Transaction
Counterparty under the FTSE Transaction and, instead the Company is obliged to pay an amount to the FTSE Transaction Counterparty, which amount is intended to be funded from the principal amounts payable on
redemption of the Bonds.
A default by an issuer of a Bond would adversely affect the Company's ability to meet its objectives. In addition, in the event of a
sale or early redemption of a Bond (other than a partial redemption for the purposes of paying the Ongoing Costs or meeting redemption
requests), for example, if the Directors elect to dispose of a Bond in the event of the downgrading of the long term credit rating of the
Approved Financial Institution issuing that Bond below the Specified Credit Rating, the Company will seek to reinvest the proceeds in other
Bonds paying interest at the same rate and on the same dates and having the same principal amount as the Bond sold or redeemed. If the
Company is unable to acquire any such replacement Bonds, it will seek to reinvest in other bonds with characteristics as closely comparable
as practicable with such Bonds. In such circumstances, its ability to make the required floating rate payments under the FTSE Transaction
may be adversely affected.
A failure by the Company to meet its obligations under the FTSE Transaction could give rise to an obligation on the Company to make a
termination payment to the FTSE Transaction Counterparty. Such a payment would adversely affect the Company's ability to meet its investment
In the absence of unforeseen circumstances, the investment objective and policies of the Company will be adhered to throughout the planned
life of the Company. The investment objective and policy set out above will only be changed with the consent of a majority of Shareholders.
The final capital entitlement is only payable at the winding-up date. If at the winding-up date the final FTSE level is at least equal
to 85 per cent. of the Start Value then the final capital entitlement will be equal to the Defined Capital Return. If the final FTSE level
is below 85 per cent. of the Start Value, the final capital entitlement will be reduced on a straight line basis from the Defined Capital
Return down to zero when the final FTSE level is less than or equal to 25 per cent. of the Start Value.
As at 30 April 2008, the FTSE stood at 6,087.30 and the index cover was 1.55166 times, this representing the extent to which the FTSE
was higher than the level required for Defined Capital Return to be paid.
If the winding-up date was 30 April 2008, the accrued entitlement as at that date would have been 124.30 pence per share.
The Defined Capital Return Fund Limited
Balance Sheet (Unaudited)
As at 30 April 2008
Notes 30 April 31 October
2008 2007
� �
Assets
Non-current assets
Financial assets (at fair value through
the profit or loss account)
Securities 3 27,610,300 27,658,900
Derivative instruments 4 6,251,730 5,013,250
Prepayments 7 80,894 161,786
Prepayment of Directors fees 4,565 9,130
33,947,489 32,843,066
Current assets
Cash and cash equivalents 5 194,934 152,435
Other receivables 6 677 6,591
Prepayments 7 162,625 165,432
Prepayment of Directors fees 9,130 9,130
367,366 333,588
Total assets 34,314,855 33,176,654
Liabilities
Non-current liabilities
Provisions 9 30,000 30,000
Liabilities (excluding net assets
attributable to holders
of ordinary shares) 30,000 30,000
Net assets attributable to ordinary 16 34,284,855 33,146,654
shareholders
Number of ordinary shares in issue 8 28,000,000 28,000,000
Net Asset Value per ordinary share 16 1.2245 1.1838
The Defined Capital Return Fund Limited
Income Statement (Unaudited)
For the period 1 November to 30 April 2008
(Comparatives are stated for the period 1 November 2006 to 30 April 2007)
Notes 2008 2007
� �
Revenue
Interest income 10 4,107 2,162
Gain on financial assets (at fair value 11 2,018,160 1,087,187
through the profit or loss account)
Total revenue 2,022,267 1,088,349
Expenditure
Management fee 13 55,847 55,540
Administration fees and expenses 13 15,936 15,849
Custodian fees 13 3,411 3,392
Directors fees 4,565 4,565
Audit fees 5,700 5,700
Interest on FTSE transaction 776,040 694,911
General expenses 22,567 37,354
Total expenditure 884,066 817,311
Increase in net assets attributable to 1,138,201 271,038
ordinary shareholders
There are zero earnings attributable to the management shares.
The Defined Capital Return Fund Limited
Statement of Changes in Net Assets Attributable to Ordinary Shareholders (Unaudited)
For the period 1 November to 30 April 2008
2008
�
Balance at 1 November 2007 33,146,654
Increase in net assets attributable to ordinary 1,138,201
shareholders
Net assets attributable to ordinary shareholders at 30 34,284,855
April 2008
For the year ended 31 October 2007
2007
�
Balance at 1 November 2006 32,242,093
Increase in net assets attributable to ordinary 904,561
shareholders
Net assets attributable to ordinary shareholders at 31 33,146,654
October 2007
The Defined Capital Return Fund Limited
Cash Flow Statement (Unaudited)
For the period 1 November to 30 April 2008
(Comparatives are stated for the year ended 31 October 2007)
Note 2008 2007
� �
Cash flows from operating activities
Increase in net assets attributable to 1,138,201 904,561
ordinary shareholders
Adjustments for:
Interest income (4,107) (6,482)
Gain on financial assets (at fair value (2,018,160) (2,593,133)
through profit or loss account)
Operating result before working capital (884,066) (1,695,054)
changes
Decrease in trade and other receivables 94,152 185,862
(Decrease)/increase in trade and other -
payables
(789,914) (1,509,192)
Interest income 828,280 1,579,478
Deposit interest received 4,133 6,026
Net cash generated from operations 832,413 76,312
Net increase in cash and cash equivalents 42,499 76,312
Cash and cash equivalents at beginning of 152,435 76,123
period
Cash and cash equivalents at end of year 5 194,934 152,435
Cash and cash equivalents made up of:
Cash at bank 194,934 152,435
The company has undrawn credit facilities of �350,000.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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